Cost Reductions to Boost Trina Solar, Nomura Says

By Ben Levisohn

Nomura’s strategists met with Trina Solar’s (TSL) management at the Clean & Green Corporate Day in Hong Kong yesterday and got some insights into what’s driving the market now.

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China is focused on the rooftop segment, Nomura’s Nitin Kumar writes, with many of the new policies encouraging Chinese to install panels on top of buildings and homes–and that will drive much of the demand in the short-term. Trina expects shipments to grown by 30% in 2013.

Nomura has Trina rated a buy largely because the company keeps its costs low–a necessary attribute given the fact that panels sell for less in China than elsewhere in the world. Kumar expects continued cost reductions will boost Trina’s margins to 15% to 20% in 2013 and 2014, up from about 5% in 2012.

China’s solar stocks have been consolidating after their recent run. Trina has gained 1.3% today, while JA Solar Holdings Co. (JASO) has gained0.9%, Yingli Green Energy (YGE) has gained 1.7% and LDK Solar (LDK) has gained 1.1%. Suntech Power Holdings (STP) has gained 1.15%. All, however, appear to be staying within their recent ranges.

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